Today, the global political and economic landscape is still undergoing major changes. As the anti-globalization trend keeps spreading, the strategic game playing between countries over resources, markets, rules, and standards is becoming increasingly fierce. Reform of the multilateral trade system has thus become a core topic in the new round of trade rule restructuring. The current multilateral trade system reflects the hegemonic thinking of the US and other developed economies, which no longer copes with the various problems arising from the further deepening of global division of labor.

Urgency for WTO-centered reform

Despite the pending Doha Round negotiations, upholding the WTO-centered multilateral trade system has become the consensus. In the context of the diversified global power pattern, it is urgent to reform the WTO’s decision-making mechanism. There is currently a “collective action dilemma” in reaching consensus on all reform issues among the 164 WTO members. A practical and feasible way to accomplish this is to draw on the operational experience of the UN Security Council, the IMF, the World Bank and other international organizations, and form a decision-making body constituted by major countries as WTO members—as soon as possible.

For controversial issues, we may consider adopting the “critical mass” negotiation method, which measures the agreeableness of the treaties by “trade share” rather than “number of the members.” The benefits brought by those agreements that reach the “critical mass” ratio should be shared by all members according to the principle of most-favored-nation treatment. In this process, a situation where negotiation topics are selected and dominated by developed countries should be breached, and negotiation topics need to be extended to textiles, clothing, agricultural products, and other sectors that the developing countries are concerned about.

Major-country cooperation

Since the 1990s, the supply pattern for international trade rules has undergone important changes. The US’s dominant position in the WTO has gradually declined, but they still have dominance in many regional free trade agreements (FTAs). Mexico, Chile, and other developing countries, as well as ASEAN, by taking advantage of their geopolitical and economic influence, have signed FTAs with a series of countries. There is also competition among some countries in the supply of public goods within particular regions. In view of this, to advocate for cooperation between major countries, especially between those major developed and major developing countries, it is helpful to reduce the “erosion effect” caused by the regional trade system on the multilateral trade system.

As the two major economies in the world, the US and China constitute the main suppliers and builders of the multilateral trade system, which is an international public good. The two, therefore, must pay close attention to the interest demands of major emerging economies.

Future Direction of reform

Regarding the future direction of reform in the multilateral trade system, it is important to ensure that the fruits of WTO reform benefit all members while lowering tariff levels and reducing non-tariff barriers by means of traditional methods. In this sense, balancing the interests of multilateral trade system members has become a crucial factor that determines whether the reform can be steadily implemented. The major developing and emerging countries, as the coordinators of different parties involved in the negotiation, can do a lot to balance the interests of all sides, ensure the final outcome of negotiations, and realize evenly shared interests and North-South balance.

In the future, concensus on multilateral trading system issues such as direction of development, reform topic selection, the timetable for reform, and the outcome of reform should be gradually reached by members based on equal communication and mutual respect. Since differences exist among WTO members regarding their demands, major trading countries must balance the relationship between their national trade interests and global trade interests. In particular, developed economies should take the lead in abiding by the agreed upon new rules of the multilateral trading system. This will help to produce “model effects” for other members, so that the new rules can be promoted and implemented on a wider scale, and a new multilateral trading system can be truly formed.

Yang Qinglong is an associate professor from the School of International Economies and Trade at Jiangxi University of Finance and Economics.